Quantitative Economics, Volume 4, Issue 3 (November 2013)

Elicited beliefs and social information in modified dictator games: What do dictators believe other dictators do?

Nagore Iriberri, Pedro Rey-Biel

Abstract

Using data from modified dictator games and a mixture-of-types estimation tech-nique, we find a clear relationship between a classification of subjects into fourdifferent types of interdependent preferences (selfish, social welfare maximizers,inequity averse, and competitive) and the beliefs subjects hold about others’ dis-tributive choices in a nonstrategic environment. In particular, selfish individualsfall into false-consensus bias more than other types, as they can hardly conceivethat other individuals incur costs so as to change the distribution of payoffs. Wealso find that selfish individuals are the most robust preference type when repeat-ing play, both when they learn about others’ previous choices (social information)and when they do not, while other preference types are more unstable.Keywords. Interdependent preferences, social welfare maximizing, inequityaversion, belief elicitation, social information, experiments, mixture-of-typesmodels.JEL classification. C72, C91, D81.